At your service (but for how long?)

In the last issue we aired the current issues around the state of the independents. This time we’re looking at servicing. Everyone says it remains an important aspect of the channel but still it continues to struggle – is there a light at the end of the tunnel, or is it just getting darker all the time? Jess Brunette reports.

To view a PDF of the complete feature as it appeared in Wares magazine, click the download button at the bottom of this page.

The changes to New Zealand’s service industry can be attributed to a number of factors, all of which will be well known to the main players in the industry – price erosion, changing consumer laws and technologies and supplier relationships that emphasise replacement rather than repair. And then there’s the skill shortage…

Does servicing have a future? Read on…

THE TIMES THEY ARE A-CHANGIN’

As a supplier, Sunbeam Service Manager Kevin Craig feels that price erosion is “the worst thing to happen to the service industry” and admits much of the repair work he undertakes isn’t worth sending to an agent. Indeed many of his repairs and replacements he puts down to goodwill towards key customers.

“Because products are so much more reliable now, many customers have a cost in mind from 15 years ago and are shocked at how much a repair costs today. I’m not sure how to raise that awareness,” he admits, adding “A lot of times people are wary when they go to a store because the store tells them it’s not worth it.”

In that respect the industry has probably “shot itself in the foot by not promoting what good servicing costs,” he says. “In the past I always thought the environment would probably be the saving grace for service but, with the economic downturn, there hasn’t been so much emphasis on that.”

Although Kevin Craig does still send jobs out to agents he has also noticed that demand for tech support has become rarer. “We haven’t trained anyone in a long time. Price erosion means many have left for greener pastures, which is good for those left but they are getting long in the tooth,” he says, amiably.

SERVICING JUST TOO DEAR THESE DAYS?

What’s the big retail perspective on all this? Robert Thompson is Technical Support Manager for The Warehouse. Working with over 36 independent service companies throughout the country on the TV side of things he has seen growth in demand for servicing over the last few years.

Thompson puts this down to the digital switchover which, of course, is now at an end: “The sheer volume of sets that were sold in the digital switchover created more service work but this is now dropping.” And this to the extent that some service companies are telling him they “will not be around this time next year, which is unfortunate as they are in rural areas,” says Thompson.

And, as we all know, the shake-out is already taking place. “We are already seeing that bigger companies are surviving in large centres but, for rural areas, sets are being couriered for service which means more cost and time all round. Rural areas are also just accepting replacement models rather than repair.”

After all, says the retailer, “With technology moving so fast and repair being around $300, people are deciding to put that money toward a new set with more features and you can’t blame them really,” he says.

ADAPT AND DIVERSITY OR DIE?

Bruce Barnett is one of the few “one man bands” still servicing TVs and is responsible for Panasonic’s brown goods repair for Central Otago and The Warehouse’s Queenstown store. All repairs are currently couriered into the hands of this septuagenarian technician.

Barnett says he enjoys the challenge of repairing LCD and plasma TVs but admits to being frustrated by the “dead ends” that modern sets can throw at an experienced technician. Issues with the new sets tend to come down to just a few different problems, so he will spend less chargeable time doing the repair.

He says: “You know within 30 minutes whether you will be able to complete it or not and then it’s either ‘fix it’ or ‘forget it’. We get to component level on some sets, but generally it’s board servicing, which does make it considerably less technical than what it used to be,” he says.

In the Taranaki region, TV and brown goods servicing has dwindled to just a handful of technicians, says Howard Reid of Trident Electronics, who also runs the former Tisco operation, Taranaki Electronics: “As far as TV is concerned, 10 years ago we had three technicians, whereas now we are down to one technician for the whole of Taranaki doing almost all the brands.”

THE DEATH OF BROWN GOODS SERVICING?

These tough conditions have seen apprentices fleeing particularly AV and brown goods servicing, especially in rural areas. Existing technicians are already facing more than they can handle and too often there is no one to step into their shoes when they retire.

And, while some have been discouraging about the attitude of young New Zealanders when it comes to learning a trade, The Warehouse’s Robert Thompson points out that, for TV at least, the younger generation have reasons for not being interested, beyond just “lack of initiative” or drive.

“When I served my apprenticeship, it was interesting – you were taught how things worked and how to fix things. Now I can take someone with a reasonable intellect and I can teach them how to fix TV sets.

“They don’t need to know how it works, they just know that ‘with that particular fault I need to change that board’ and that’s just not interesting to young people who are interested in computing and IT,” he says.

People are one issue, parts are quite another. Many service people are concerned about expensive and/or difficult to obtain parts, especially if a product is out of warranty. It should be said that suppliers with a strong New Zealand presence tend to have a better reputation for this but, more often than not, replace rather than repair is driven by availability, paperwork, delivery times and cost, with the latter often the final straw.

This has led to some in the industry looking further afield to online outlets like AliExpress or eBay to help customers who are happy to wait for parts that can be a quarter of the price of those available from the local supplier, if they are available at all.

HIGH LEVEL TECH(NOPHOBIA)?

These dedicated one man bands seem to be a dying breed, but this will be no surprise to the servicing industry. For example, Gavin Bowden of the Electro Technical Association (ETA) says he wrote a paper as far back as 2007 that said New Zealand would lose 60% of its brown goods service agents around the country over a period of five years.

“I think I was out by around 4%,” he explains. “Many of them were getting older and didn’t have exit strategies with no apprentices to sell their business to. Then the 2008 recession took many of them out. Some of them poured their savings into it to keep afloat and reduced in size then straight after that many of them suffered after the recession as they didn’t have the goods to deliver when it bounced back a little.”

Bearing these factors in mind, I asked Gavin Bowden if he felt there was still a future for brown goods servicing. His answer? A qualified “yes”: “There is light at the tunnel for some of them and it’s called connectivity – if they choose to go there. If the older blokes accepted the fact that they should cross into the newer convergent technologies they would have some work, but a lot of them say they are too old to learn this stuff.

“So we need some young blood and people who understand smart technology. Despite some of these older guys being high level technicians, there is some technophobia there,” he says with irony.

INDIES MAKE GOOD WITH WHITEWARE SERVICING

So with browns servicing apparently in dire straits, is whiteware servicing a better place to be? One operator who’s seeing good returns by investing, rather than divesting, is Mark Heginbotham at 1OO% Newbolds Masterton. Having recently added a service and trade-in arm to the store’s offering he has nothing but positive things to say about the initiative

“Service is a great addition to our proposition as a retailer to be able to offer back up to our products and we will continue to offer service as it is something that the big guys do not offer and that our customer base appreciates,” he says.

Norm Clark runs the service and trade-in centre for 1OO% Newbolds and, while he is glad to have plenty of business, he also has concerns for the future. His main struggle, as with others, is keeping and finding young trained service personnel.

“Many times we get through training young, keen servicemen only to lose them to the almighty dollar overseas. Also, many manufacturers are making it difficult to recoup dollars spent under warranty repairs so sometimes agents are losing money and that’s makes it hard to pass on dollars to trained personnel.”

Alister Lilley at Smith & Church in Ashburton also operates a standalone service outlet with some strict policies that have been paying off for this independent retailer.

“In whiteware we only sell what we service and we are the only retailer in town that services what we sell which is a point of difference for us,” he says.

This policy has allowed Smith & Church to stick with products offering decent returns and has in turn helped the retailer maintain healthy returns in a rural area where service calls can often entail a return trip of 100 kilometres.

“We have a dollar each way in that we can sell a product we can stand behind and service for its lifetime, which is fair and reasonable. So in whiteware we like to look the customer in the eye and say ‘if you have problem you can come back and see us’. And that’s the beauty of the independent network because they do care and we aren’t into scallywag stuff that just creates landfill,” Lilley says.

WHITHER WHITEWARE SERVICE AGENTS?

That’s the retailer outlook. But dedicated service agents also confirm that whiteware is a far healthier game to be in than their contemporaries in browns servicing.

Roger Blincoe from Axial Appliance Servicing confirms: “Consumer electronics are really pushing it uphill. Fortunately we aren’t in the same position as they can’t make a washing machine with a screen and one board yet.”

Still, no one in whiteware servicing is claiming it’s an easy business to be in. “You can go faster and faster just to stay where you are and the last 12 months have been pretty difficult,” Blincoe says.

Jeff Windress of Windress Home Appliance Services reports a very busy 12 months but stresses that it hasn’t been easy: “There are very few larger operations like us and the one man bands pick and choose their work and often throw stuff our way, especially if it’s a harder job.

“Our main issue however is keeping the right parts in stock to satisfy our customers so when we go to that call, we are trying to fix it first time, every time, on time. But every six months a new pile of models come out and they are never the same,” Windress says. “Now we are going out and there are products we haven’t even seen before.

“Some suppliers are great with their training and keep us up to date. But otherwise you go somewhere and feel like an idiot when you have to ask the customer how to work it!”

And while some overseas suppliers may run occasional webinars, the Windress team can’t always afford to spend two hours getting up to date in front of the computer during peak work hours, says Jeff Windress.

The bottom line? “If you don’t know how something works then you don’t have a hope in hell of fixing it.”

SERVICING LOOKS TO THE FUTURE

One player that has higher hopes for the future of whiteware servicing and, importantly, is in a position to do something about it, is Mike Julius of Appliance Works who was recently appointed General Manager of Service for Jones Family Investments (JFI) to provide a nationwide installation and servicing network for Kitchen Things – and other retailers.

“What JFI recognise is that if they are selling a high end product they need a high end level of service if they want to retain their customers. Being a distributor, importer and retailer makes it even more important as there are certain obligations under the CGA that they need to fulfil and JFI recognises that and want to control the quality of the service that their customers are going to get following their purchase,” Julius says.

“Importantly, this is not an exclusive solution to only our own business. We are offering this to the entire industry, the upside being that we will have a service network that captures 80% of New Zealand’s population and offers a strong viable servicing solution across the board in an industry that is suffering,” he says.

Julius also feels that the initiative will address the most pressing issue for players in the service industry: “We need more training and apprentices coming through so we will be investing in making sure there is an apprentice coming through each one of our workshops so that we are self-fulfilling our future need rather than waiting for someone else to do it for us.

“It’s not always an attractive industry for young tradesmen to come into, so we need to identify smart young guys who want a bit of guidance and some security within a job where they know they will always be needed and give them the right pathway to a successful career. But it is tricky; it’s not an easy industry.”

Allister Cotter of Cotters Electrical is another to acknowledge the difficulty in not only finding but also training a suitable apprentice. But Cotter for one feels that, despite the difficulties of today’s service industry, there will always be a place for servicing – even if the landscape changes dramatically.

“People will always want a second opinion on things so that at least they know what they are dealing with before they just throw it in the bin. That gives them a chance to think about getting it fixed, so I think there will always be room for people fixing things.”